Item 5: Fees and Compensation
Precocity’s compensation for the investment advisory services it provides to the Funds is comprised
of an asset-based management fee and an incentive allocation that is based on the performance
achieved for the account of each investor. The fees and expenses applicable to each Fund are set
forth in detail in each of the Fund's respective offering memorandums. A brief summary of fees
and expenses is provided below.
Management Fee
The Master Fund will pay Precocity a management fee of 2.0% per annum based on the net asset
value of each investor’s capital account attributable to tranche A limited partnership interests and
1.5% per annum based on the net asset value of each investor’s capital account attributable to
founders tranche limited partnership interests. Founders tranche interests will be offered at the sole
discretion of Precocity. The SMA will pay a management fee based on the value of the assets in
the account. Management fees will be calculated and paid in advance of each fiscal quarter.
Precocity may vary the management fee for particular investors in the Fund and for the SMA by
separate agreement with them without notice to the other investors or clients and may, in its
discretion, reduce or waive any management fees at any time. Precocity intends to waive the
management fee for itself and its constituent members or partners, affiliates, employees, and family
members.
Incentive Allocation
Precocity will be entitled to share in the appreciation in value of each investor’s capital account
balance, subject to a loss carryforward procedure. Generally, at the end of each fiscal year, the
Master Fund will reallocate from each investor’s capital account an amount equal to 20% of the net
capital appreciation for the fiscal year allocated to the investor’s capital account. The net capital
appreciation upon which the calculation of the incentive allocation is based will be reduced by the
Form ADV Part 2A Firm Brochure | Precocity Capital LP March 22, 2018
loss carryforward procedure. The incentive allocation may be waived, reduced or calculated
differently with respect to certain investors.
If an investor withdraws capital other than as of fiscal year-end, the Funds will make an incentive
allocation based on year-to-date performance, in proportion to the reduction in the investor’s
relevant account balance caused by the withdrawal. Those incentive allocations will reduce the
withdrawal proceeds payable to the withdrawing investor. Investors may withdraw capital after the
allowable lock-up period has expired. Withdrawal proceeds from the portion of a capital account
that is still within the lock-up period will be reduced by an amount equal to 6% of the amount
requested to be withdrawn. Please refer to each Fund’s offering memorandum for a more detailed
description of withdrawal requirements and limitations.
The SMA also pays an incentive fee.
Fund Expenses
The Onshore Fund and the Offshore Fund will bear their own expenses and their pro rata share of
the expenses of the Master Fund. If an expense can be attributed to all the Funds, Precocity and/or
the General Partner will allocate the expense among the Funds at its discretion.
Generally, all expenses borne by the Funds will be debited to all of the investor’s capital accounts
on a pro rata basis in accordance with their ownership percentages. To the extent that expenses to
be borne by the Funds are paid by Precocity and/or the General Partner, the Funds will reimburse
Precocity and/or the General Partner for such expenses. The Funds’ actual annual operating
expenses are disclosed in the Funds’ year-end audited financial statements, which are provided to
each investor.
Fund expenses may include, but are not limited to, the management fee described above; expenses
related to the research, due diligence and monitoring of actual and prospective investments (whether
or not consummated) and the consummation of investments; and operational expenses. The Funds
will bear all costs in connection with their organization (including the Master Fund’s organizational
costs), either directly or by reimbursing Precocity. The Funds may amortize those costs over 60
months. The Funds will also bear all costs in connection with the ongoing offer and sale of interests,
including costs of preparing, revising, reproducing and disseminating offering materials and
supplemental materials.
Please refer to each Fund’s offering memorandum for a more detailed description of Fund expenses.